Ross Stores (ROST) Q3 Earnings call transcript Nov 21, 2025
1min read Ross Stores recently held its third quarter earnings call, revealing mixed results for the period ended November 2, 2024. The retailer reported a slight increase in earnings per share, despite a disappointing sales performance due to a combination of factors including weather challenges and execution issues.
Financial Performance Highlights
The company's total sales for the third quarter reached $5.1 billion, up from $4.9 billion in the prior year. Comparable store sales increased by 1% year-over-year, driven by strong performance in cosmetics, accessories, and children's merchandise. Despite the sales growth, earnings per share came in slightly lower than expected, with guidance for the fourth quarter revised downward. Operating margin for the quarter was up 75 basis points to 11.9%, thanks to lower incentive, freight, and distribution costs.
Merchandising Execution and Opportunities
Barbara Rentler, CEO, acknowledged that the company could have done better in executing some merchandising initiatives and identified areas for improvement, particularly in the cosmetics and accessories categories. The company plans to focus on these strengths in the fourth quarter, especially during the holiday season. Rentler expressed confidence in the 2% to 3% growth projection for the fourth quarter, supported by strong performance in key merchandise areas and gifting categories.
Market Perception and Investor Questions
During the call, analysts probed the company on various aspects of its performance and strategy. Matthew Boss from JPMorgan questioned the execution issues and the confidence in the fourth quarter comps. Michael Hartshorn, COO, highlighted the company's efforts to fine-tune its brand and value strategies, emphasizing the importance of customer acceptance and the learning process. Paul Lejuez from Citigroup asked about the impact of shifting towards recognizable brands and the potential for margin headwinds. The company responded that it expects earnings accretion over time as it builds relationships with brands and learns what works best for its customers.
Future Outlook
Looking ahead, Ross Stores faces both challenges and opportunities. The company will continue its expansion with new store openings and closures, aiming to end the year with 1,831 Ross stores and 354 dd's DISCOUNT locations. The transition to new leadership, with Jim Conroy taking over as CEO in February 2025, will bring fresh perspectives and strategies to the company. The focus on delivering compelling value and addressing the needs of low to moderate income customers remains central to Ross Stores' growth strategy.
In conclusion, Ross Stores' third quarter earnings call revealed a mixed performance, with sales growth but lower-than-expected earnings per share. The company acknowledged execution issues and focused on improving merchandising strategies for the holiday season. The transition to new leadership and ongoing expansion plans suggest a focus on value and customer satisfaction, setting the stage for future growth.
